Scottish Court of Session Decisions

The Commissioners appointed under the Educational Endowments (Scotland) Act 1882 (45 and 46 Vict. c. 59) submitted to the Scottish Education Department a Scheme for providing for the administration of Donaldson's Hospital, the Orphan Hospital, and John Watson's Institution, all in Edinburgh, and the scheme was published by the Department as required by section 26. The scheme proposed to amalgamate the institutions. The cases now reported were cases presented by the governing bodies on the one part and the Commissioners on the other, to have the objections made by the former to the scheme decided.

Section 1 of the Act provided as follows—‘“Educational endowment’ shall mean any property, heritable or moveable, dedicated to charitable uses, and which has been applied or is applicable in whole or in part, whether by the declared intention of the founder or the consent of the governing body, or by custom or otherwise, to educational purposes, but shall not, except with the consent of the governing body, include the funds, whether capital or revenue, of any incorporation or society contributed or paid by the members of such incorporation or society by way of entry-moneys or other fixed or stated payments, nor burgess fines paid to any such incorporation or corporate society except as hereafter provided. ‘Governing body’ shall mean the managers, governors, or trustees of any endowment or other persons having the administration of the revenues thereof.”

Section 4 of the Act provides for the appointment of Commissioners, and by section 5 it is enacted—“Subject to the provisions hereinafter contained the Commissoners shall have power to prepare drafts of schemes for the future government and management of educational endowment, which schemes may provide for altering the conditions and provisions of such endowments, including the powers of investing the funds thereof, or amalgamating, combining, or dividing such endowments, or altering the constitution of the governing bodies thereof, or uniting two or more existing governing bodies, or establishing new governing bodies with such powers as shall seem necessary, and to insert in such schemes clauses incorporating the governing bodies, whether new or old.”

Section 7 provides that “Subject to the provisions of this Act it shall be the duty of the Commissioners in reorganising as aforesaid educational endowments to have special regard to making provision for secondary or higher or technical education in public schools or otherwise in those localities to which the endowments severally belong, or in such manner as to secure to the inhabitants of those localities the benefit of such endowment, and if the Commissioners think fit they may provide for the establishing or aiding of industrial museums and libraries; provided that nothing in this Act contained shall be taken to compel the Commissioners to restrict any bursary, exhibition, scholarship, or other educational benefit attached to or tenable at any educational institution to the children of persons resident in the locality where that institution exists.”

Section 8 provides that “This Act shall not apply (1) To any educational endowment given either by present gift made subsequently to the passing of the Education (Scotland) Act 1872, or by the will of a testator who died subsequently to the passing of the said Act.”. .. And by section 9 it is further provided that “Where part of an endowment has been given before the passing of the Education (Scotland) Act 1872, and another part has been given subsequently to the passing of the said Act, and the two portions cannot in the opinion of the Commissioners be conveniently separated from each other, the date of the older part of the endowment shall be held to be the date of the endowment.”

Section 10 provides—“Where any part of an endowment is an educational endowment within the meaning of this Act, and part of it is applicable or applied to other charitable purposes, the scheme shall be in conformity with the following provisions (except so far as the governing body of such endowment assent to the scheme departing therefrom) … (3) If the proportion applicable to other charitable uses amounts to or exceeds one-half of the whole of the endowment, the governing body of such endowment existing at the date of the scheme shall, so far as regards its non-educational purposes, remain unaltered by the scheme.”

Section 12 provides—“For the purposes and subject to the provisions of this Act endowments for the payment of apprenticeship fees, or for the advancement in life, or for the maintenance or clothing, or otherwise for the benefit of poor children, and the funds and property of the Society in Scotland for Propagating Christian Knowledge so far as applicable or applied to educational purposes, shall be deemed to be and may be dealt with as educational endowments.”

Section 13 provides—“In framing schemes the Commissioners shall save or shall make due compensation for the vested interests of individuals holding any office, place, employment, pension, compensation allowance, bursary, or emolument under or arising out of the educational or any other endowment at the date of the passing of this Act, and shall provide that no funds now applied in terms of the founders' directions to free elementary education shall be diverted to any other purpose, except to the extent to which such funds are manifestly in excess of the requirements for the purpose of free elementary education of the localities to which they belong. ‘Elementary education’ shall mean such education as may be given in the State-aided schools of Scotland pursuant to the provisions of the Educational (Scotland) Act 1872, and in terms of the minutes of the Scotch Education Department in force for the time being with respect to the administration of the Parliamentary grant for public education.”

Page: 72↓

Section 15 provides—“In framing schemes it shall be the duty of the Commissioners, with respect alike to the constitution of the governing body and to educational provisions, to have regard to the spirit of founders' intentions, and in every scheme which abolishes or modifies any privileges or educational advantages to which a particular class of persons is entitled, whether as inhabitants of a particular area or as belonging to a particular class in life or otherwise, they shall have regard to the educational interests of such class of persons: Provided always that where the founder of any educational endowment has expressly provided for the education of children belonging to the poorer classes, either generally or within a particular area, or otherwise for their benefit, such endowment for such education, or otherwise for their benefit, shall continue, so far as requisite, to be applied for the benefit of such children.”

The history of Donaldson's Hospital is as follows:—James Donaldson, Esq, of Broughton Hall, died in 1830, and by his will bequeathed his whole property “to build and found an hospital for boys and girls, to be called Donaldson's Hospital, preferring those of the name of Donaldson and Marshall—to be after the plan of the Orphan Hospital in Edinburgh, and John Watson's Hospital”—and he appointed certain gentlemen “to be trustees for executing this will, and also for the Hospital.” They accepted the trust, and in 1833 the Hospital was built with accommodation for about 200 boys and 200 girls. On 22d November 1844 the surviving trustees executed a deed of constitution for Donaldson's Hospital, by which the whole management was devolved upon 27 persons as managers and governors, twelve of whom were appointed in virtue of the offices they held, the remainder being appointed nominatim as persons of good professional and social standing. The heritable property was vested in five trustees named. The deed further empowered the Governors to admit from time to time such a number of poor children, one-half boys and the other girls, as the funds might suffice at the time to maintain and educate, of which the Governors should be sole judges, and in such manner as the Governors should decide, but no child was to be admitted to the charity whose parents could maintain him or her. The age of admission was fixed at six as a minimum and nine as a maximum, and no child was to remain after fourteen. A preference for admission was given to, first, poor children of the name of Donaldson and Marshall, and second, such children as appeared to the majority of the Governors most destitute.

In 1848 it was resolved to set apart a portion of the Hospital for deaf and dumb children in both sexes who were destitute.

In 1850 the Hospital was opened, and has since been managed under the deeds of constitution, the Governors from time to time framing bye-laws according as they judged them to be in accordance with the true intent of the deed and the will of the founder. The total number of children boarded had on an average been above 200, and these were drawn from all parts of Scotland, the number of applicants as hearing children having always been much in excess of the number of vacancies. Five-sixths of those received were fatherless children. The free elementary education given included such branches as were likely to fit the children to be useful artisans or servants, and the Governors received satisfactory assurances of the success of this education.

Down to 1869 there were only 70 deaf-mutes in the Hospital, but the number was augmented, after formal inquiry, to 119, with a result satisfactory to the Governors, who were satisfied that the combination of hearing children with the deaf-mutes acted beneficially on both classes. The free annual income was £8700.

The history of the Orphan Hospital is as follows:—It owed its origin to the exertions of Mr Andrew Gairdner, private contributions, and a collection made in the Edinburgh churches. In 1734 it was built on the ground immediately adjoining the old Trinity College Church. In 1739, when Mr Gairdner died, there were 74 orphans maintained and educated. In 1742 letters-patent were granted by George II., which, proceeding on the narrative that “there were great numbers of children orphans whose parents cannot bear the charges of their education,” and that certain funds had been agreed “to be applied for defraying the charge of maintaining them,” &c., incorporated certain persons under the title of “The Orphan Hospital and Workhouse at Edinburgh,” with power to make bye-laws, &c., for the government of the Hospital, and to elect such persons as they chose, and who should be contributors to the institution. At the date of these Cases the corporation numbered 90. There was a further power given to them to elect 15 managers. By bye-law 15 it was provided that if any person gave a benefaction of £200 sterling to the corporation, and desired to present a child to the Hospital, any quarterly meeting might give such benefactor and his heirs a perpetual right of presentation, and when such child was removed from the Hospital a similar right to present another child, but reserving power to the corporation to redeem the right on repayment of the £200. These rights were subsequently granted on payment of £500, and of them there were, at the date of this Case, 18, conferring rights to present 33 children. Of this number there were 24 in the Hospital at the date of this Case. Of these rights 3 had been acquired since 1872. For some years a system had been in force of admitting boarders to the Hospital—orphans whose friends are able to contribute towards their support, £16 being paid for a boy and £14 for a girl. The number of children in the Hospital was 95–59 boys and 36 girls—59 foundationers and 36 boarders. Gifts, bequests, and legacies had been received since 1872 to the amount of about £10,000, while the funds had doubled in the last sixty years. The sum of £10,000 would, in the opinion of the Governors, be adequate on the boarding-out system to secure substantial benefits in the way of education, &c., for the class of children for which the money was subscribed.

“John Watson's Institution” was built and opened in 1828 for boys and girls of the destitute class, and owed its origin to the will of John Watson, W.S., Edinburgh, who died in 1759, leaving £5000 to trustees to be applied as they should think right “for pious uses.” It was in 1822 organised by a scheme obtained by Act of Parliament (3 Geo. IV. cap. 23)—which scheme provided for purchasing ground for building and endowing an institution in or near Edinburgh

Page: 73↓

for the maintenance and education of destitute children, and bringing them up to be useful members of society.

In the scheme drawn up by the Commissioners, in which (as already narrated) it was proposed to amalgamate the three institutions, the following alterations on the existing state of affairs was contemplated—Section 3 provided for the constitution and election of a new governing body, to consist of 21 persons. Section 23 provided that within two years after the date of the scheme the governors were to discontinue the existing hospitals and schools in the three institutions; no new foundationers were to be elected to the Orphans' and Watson's Hospitals, and only deaf mutes were to be admitted as foundationers at Donaldson's. Section 24 provided that the governors should have power to board out the boys on the foundation of Watson's, the children on the foundation of the Orphan, and the children other than deaf-mutes on the foundation of Donaldson's Hospitals respectively, and to pay for them for the time during which they would have remained as foundationers such a sum as they deemed sufficient for maintenance, &c., and also to pay for their education during that period at such schools as they thought proper. Section 27 provided that the governors should establish and maintain an hospital and school within the buildings of the Orphan Hospital. Section 28 provided that they might borrow money, and expend annually up to £5000, for the maintenance of the school and hospital. By section 29 they were empowered to transfer to the hospital the deaf-mutes in Donaldson's, charging for their maintenance and education a sum which they considered reasonable and parents able to pay. By section 30 it was provided that the deaf-mute children were to be admitted from seven to nine years of age, though the governors might admit them up to eleven if they saw fit. The applicants were to be approved by the governors, and children were to be rejected whose state of health or constitution made their admission undesirable. Section 31 provided that they were not to remain in the hospital as boarders after fourteen years old. Section 32 empowered the governors to establish classes for deaf-mutes above fourteen in or out of the hospital, admitting to such classes children destitute and showing special aptitude, and in case of necessity making an allowance of £20 for each child, the limit of age for this privilege being fixed at eighteen, and no further payment to be made for any child whose progress was not satisfactory. By section 33, 60 children, selected by the new governing body, were to be entered on the foundation, not being deaf-mutes but orphans and destitute, and after they had passed an examination equal to the standard suitable to their ages. If the candidates exceeded the vacancies, regard was to be shown to merit as ascertained by the examination. They were to be boarded out, but the governors might, if they thought right, acquire a house for their accommodation. By section 34 day-scholars might be admitted (either hearing children or deaf mutes), on payment of fees.

By sections 41 and 42 a school was to be established for girls in Donaldson's Hospital, and power was given to borrow money and expend up to £3000 annually on the maintenance of the school. By section 43, the school was to consist of a secondary and a primary department, the governors being empowered to discontinue the primary if it should appear expedient that the school should be devoted wholly to higher instruction. By section 44 the children were to be admitted after examination. By sections 45 and 46 it was prescribed that in the primary department the highest classes were to be those suitable for children in the 5th Standard of the present Scottish Code, and in the secondary the subjects included reading, writing, arithmetic, Latin, German, French, needlework, pianoforte, cookery, &c., &c. By section 47 fees were to be charged in both departments to cover the cost of education. Section 55 provided that fifty girls, orphans or needful of assistance, should, after examination, be entered on the foundation, regard to merit at the examination being had if the candidates should be more numerous than the vacancies. Section 56 fixed a sum of not more than £300 to be applied for maintenance of the most necessitous of the foundationers. By section 57 an annual sum of £500 was to be applied in establishing competitive bursaries of £10 value, with free education for a period of not more than three years among girls whose parents could not afford to give them higher education, and who were pupils in the primary department or at State-aided schools, and had passed the 5th Standard, or who were on the foundation under section 33. By section 58 higher bursaries were established in the school, to be awarded by competitive examination. By section 59 a sum of £500 might be applied in establishing bursaries for the higher education of girls, to be awarded competitively among pupils attending Donaldson's School. Section 60 provided that bursaries, each of £10 yearly value, should be awarded by competitive examination among boys and girls attending State-aided schools through Scotland, outside Edinburgh, who had passed the 5th Standard and whose parents could not afford to give them a higher education, to be tenable for three years at Donaldson's School or any other school approved by the governors.

Two Special Cases were presented to the Second Division of the Court of Session by the governing body of Donaldson's Hospital as first parties and the Educational Endowments Commissioners as the second parties in the one case, and by the governing body of the Orphan Hospital as the first parties and the Commissioners as the second parties in the other case, on the ground that the scheme was not within the scope or made in conformity with the Educational Endowments (Scotland) Act 1882. The Cases were presented under the 30th and 31st sections of the Act, which provides, inter alia, that if the governing body of any endowment to which a scheme relates feels aggrieved by the scheme on the ground that it is not within the scope of or made in conformity with the Act, such body may submit a Case to the Court of Session, to which the Commissioners may be parties, for the opinion of the Court on the question therein stated, and if the Court is of opinion that the scheme is contrary to law on any of the grounds in this section mentioned, the Scotch Education Department shall not approve thereof, but may remit it to the Commissioners. The judgment of the Courtof Session is to be final, and the Court may direct the

Page: 74↓

expenses to be paid out of the funds of the educational endowment to which the proceeding relates.

In the Case for Donaldson's Hospital the first parties, the Governors, contended:—“(1) That the scheme is not warranted by and is contrary to section 5 of the Act, in respect that it proposes the extinction of the existing governing body; (2) that the scheme is contrary to the provisions of section 13 of the Act, in respect that it involves a diversion of funds now applied, in terms of the founder's directions, to free elementary education, such funds not being manifestly in excess, and indeed being manifestly not in excess, of the requirements of the localities to which they belong; and (3) that the scheme is contrary to the provisions of section 15 of the Act, as being framed in disregard of both the spirit and the letter of the founder's intentions, and in particular of the express instruction ‘to build and found an hospital for boys and girls,’ and also as failing to satisfy the other requirements of that section.”

The Commissioners contended that the said scheme is within the scope of the Act; that it is not contrary to any of the provisions of the said sections; and generally is framed in conformity with the whole provisions of the Act.

In the Case for the Orphan Hospital the first parties (Governors) contended:—“(1) That the property of the Orphan Hospital is not an educational endowment within the meaning of the Act as defined by sections 1 and 12. (2) That in any case that proportion of the funds of the Hospital which has been contributed as a condition of membership, or in consideration of rights of presentation, falls within the exception stated in section 1 of the said Act, and cannot be dealt with as educational endowments. (3) That in any case the large sum of money gifted to the Hospital since 1872, or received from testators dying since that date, or yet to be received on the expiry of liferents, is excluded from the operation of the said Act in terms of section 8. There is nothing to prevent the convenient separation of this sum from the other part of the endowment, and section 9 of the said Act does not apply. (4) That the proposed extinction of the existing governing body of the Hospital is not warranted by section 5 of the said Act (which while it authorises the amalgamation, combining, or dividing of endowment, does not warrant the total abolition of a governing body, but only the alteration of its constitution, or the uniting of two or more existing governing bodies, or the establishing of new governing bodies—this last clause being plainly applicable to the case of the dividing of an endowment). (5) That the proposed extinction of the existing governing body is contrary to section 10 of the said Act, subsection 3, the proportion of the funds applicable to charitable uses other than education amounting to or exceeding one-half of the whole endowment. (6) That the scheme does not have regard to the educational interests of the particular class of persons hitherto benefited by the institution, and is contrary to the provisions of section 15 of the said Act.”

The Commissioners as second parties contended—“That the whole property of the Orphan Hospital is an educational endowment within the meaning of the Act; that the sums contributed by members, or in respect of which rights of presentation have been conferred, do not fall under the exception stated in section 1 of the Act; and that, in respect the Commissioners are of opinion that that part of the property given since 1872 cannot be conveniently separated from the older part, the property given since that date is not excluded from the operation of the Act. The Commissioners further contend that the scheme is within the scope of the Act, that it does not contravene any of the provisions thereof, and generally, is made in conformity with all the provisions thereof.”

The following question of law was submitted in both cases:—“Whether the said scheme, in the particulars above mentioned, or in any, and if so, in which of them, or otherwise, is not within the scope of or made in conformity with the Educational Endowments (Scotland) Act 1882, and is contrary to law?”

The two cases were heard together.

The arguments submitted by the parties in both cases were founded on their contentions, which are narrated above.

Argued for the Commissioners—As matter of law, the Commissioners had a discretion committed to them by the Legislature, and unless the Court were of opinion that there has been some serious miscarriage or gross injustice done under the various deeds of endowments, it would not interfere— Campden Charities, May 1881, 18 L.R., C.D. 310, vide opinion of Sir Geo. Jessel, M.R., and James, L.J. Now, having regard to the scope of the Act, a perusal of sections 7, 13, and 15 showed that it was contemplated by the Legislature that where directions suitable enough a century ago were not suitable to the present state of matters a certain amount of gentle violence might be done to the founder's intention to carry out its spirit in accordance with modern ideas. Hence the scheme providing specially for secondary or higher education. Taking Donaldson's Hospital first:—(1) As to the foundation and constitution. Full power had been given by the 5th section to alter this, and it was not limited to the case of the foundation being provided. (2) There was no diversion of funds applied in terms of the founder's direction to free elementary education. Section 5 gave the Commissioners absolute power not merely to alter the condition of endowments but to amalgamate them. Therefore in judging whether the will had been carried out in the scheme, the whole scheme must be looked at. In point of fact the Commissioners had endeavoured to comply with the leading features of the three trusts by the benefitting parties intended to be benefitted in those schemes, viz., the children of the poorer classes, giving a preference to orphans, and devoting a considerable part of the funds to educate and maintain them. Five-sixths of the whole funds were by the scheme to be applied to giving elementary education, only £1000 a-year being devoted to higher education. It must be borne in mind too that the Education Act of 1872 had greatly altered the law with regard to providing elementary education— Forrests' Trustees v. Commissioners, March 20, 1884, 11 R. 719. The Commissioners had only altered the means to adapt them to an end. Clephane v. Mags. of Edinburgh, February 26, 1869, 7 Macph. (H. of L.) 7, vide Lord Westbury's opinion. (3) The Commissioners had the right to

Page: 75↓

prefer girls to boys, as they found the latter amply provided for. (4) In subjecting the children to examination the Commissioners were only carrying out the directions in the statute. When a vacancy occurred there must be a selection of applicants, if, as might be expected, they were numerous. Taking the Orphan Hospital next:—(1) It was said this was not a proper educational endowment. But it fell fairly within the definition. (2) As regards the entry-money, the donations of £500 were not within the first section. There was no condition of entry at all. It could not be said how much was entry-money and how much voluntary donation. (3) As regards the right of presentation, the proper parties were not represented. But further, they were sums devoted to educational purposes, and fell within “educational endowments.” (4) Under section 9 the Commissioners had power to say whether the sums paid or given since 1872 could be separated from sums previously given, and they had decided this in the negative. On the whole matter, the questions as regards both institutions fell to be answered negatively.

The Court made avizandum.